AUSTRAC opens consultation on new rules for digital currency exchange providers

Maria Nikolova

The public consultation is open from January 16, 2018 to February 13, 2018.

Australia’s financial intelligence agency AUSTRAC has earlier today provided another update to digital currency exchange providers. Somewhat later than initially planned, the agency published its draft AML/CFT Rules for consultation.

The draft amendments result from the Anti-Money Laundering and Counter-Terrorism Financing Amendment Act 2017, which is also known as the “Bitcoin bill”. In December last year, the legislative piece passed both Houses and got Royal Assent.

Today, AUSTRAC opened a public consultation into the draft AML/CFT Rules. The period of the consultation lasts until February 13, 2018.

The rules, inter alia, provide detailed information on the Digital Currency Exchange Register, as well as requirements for information to be reported about a threshold transaction.

Under the draft rules, an application for a person (the applicant) to be registered on the Digital Currency Exchange Register must contain the relevant registrable details, including:

  • identification and, where applicable, registration details of the applicant and each of the applicant’s key personnel;
  • details regarding the nature, legal form, status, and structure of the applicant’s business (including in relation to beneficial ownership and control); and
  • whether the applicant or any of its key personnel have been:
  • i. charged, prosecuted, or convicted in relation to money laundering, terrorism financing, terrorism, people smuggling, fraud, a serious offence, or an offence under the AML/CTF Act or FTR Act; or
  • ii. the subject of any adversely determined civil or criminal proceedings or enforcement action in relation to the management of an entity, or their commercial or professional activities.

AUSTRAC’s CEO may suspend the registration of an entity in certain cases. In such cases, the AUSTRAC CEO may have regard to whether the person or any of its key personnel have been:

  • (a) charged, prosecuted, or convicted in relation to money laundering, terrorism financing, terrorism, people smuggling, fraud, a serious offence, or an offence under the AML/CTF Act or FTR Act;
  • (b) the subject of a civil penalty order made under the AML/CTF Act; or
  • (c) the subject of any adversely determined civil or criminal proceedings or enforcement action in relation to the management of an entity, or their commercial or professional activities.

Other factors to consider when suspending one’s registration are whether there are reasonable grounds to believe that:

  • (a) any information or document provided under this Chapter was false or misleading (whether by inclusion or omission) in a material particular;
  • (b) the continued registration of the person involves, or may involve, significant money laundering, financing of terrorism, or other serious crime risk.

Regarding the details a report about a threshold transaction should contain, the draft rules stipulate these details range from the denomination or code of the digital currency and the Internet Protocol (IP) address information of the customer to the unique identifiers relating to the digital currency wallet(s) of the customer.

Let’s recall that the Amendment Act expands legislation to include regulation of digital currency exchange providers. Under the new regulation, such providers will be required:

  • enroll and register with AUSTRAC;
  • establish, implement and maintain an AML/CTF program, which sets the framework for businesses to comply with their obligations, including customer due diligence requirements;
  • report threshold transactions and suspicious matters to AUSTRAC, and
  • keep appropriate records.

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